That's right. Customers will refuse to accept it unless the technology is open. Youth in particular really dislikes closed technologies, closed systems and the like. I think the failure of AOL LLC of the US is good evidence of this. When the Internet was just beginning to spread, AOL boosted its subscriber base by providing special services only to its customers. After a while, though, customers began rebelling, complaining that they weren't children. Because AOL wanted to keep them locked up in a narrow portion of the immense Internet cosmos, open technology was created.
Sony hasn't taken open technology very seriously in the past. Its CONNECT music download service was a failure. It was based on OpenMG, a proprietary digital rights management (DRM) technology. At the time, we thought we would make more money that way than with open technology, because we could manage the customers and their downloads.
This approach, however, created a problem: customers couldn't download music from any Websites except those that contracted with Sony. If we had gone with open technology from the start, I think we probably would have beaten Apple Inc of the US.
There was a time when it made sense to divide the market with closed technology, and monopolize a divided market, but that's just not an effective strategy any more. In the Internet universe, there are millions of stars - millions of options that have been created through open technology.
Apple's iTunes Store uses its own proprietary DRM called FairPlay. I think this gives Sony a chance to provide something that Apple can't. And we have to move ahead and grab that opportunity before Apple begins to provide support for other hardware and blocks us out.
Understanding customers and open technologies are not the only important things. Prices should also be reasonable and reflect what customers are willing to pay. The shortcut to making this possible is through keeping an eye on costs. And a well-regarded user interface (UI) is as important as price, because it helps customers think, "This is something I'm going to use; it's mine." It is the customers who will tell us which UI is good, or bad.
In your CES keynote
speech you introduced an Internet terminal from another company, chumby
industries inc of the US. Why?A number of people from the West Coast group firms were very unhappy to see me use the chumby device, and asked: "Why did the CEO of Sony demonstrate a chumby device?" However, I did this deliberately, because people shouldn't be bound by old customs. Plus, I didn't want to add extra cost to the presentation.
I became aware of the excellence of that device when I was using it in New York. It will display things like the scores of my favorite football teams, photos, the weather and news, even if I just let it sit there. It made me realize that content distribution absolutely requires personalization. And it showed me how great it is to be able to naturally pick up the information you, as an individual user, most want to see.
Customers
today want to be able to freely access content via the Internet,
information technology. This requirement represents a threat to our
content business, and to existing frameworks for rights management. I
don't see that we have any choice, though. We have to create a
sanctuary which provides customers an environment for their enjoyment.
That is how we can change a threat to the content business into an
opportunity.
A lot of people thought Sony's content download service was doomed, but it's in a pretty good place right now in the form of the PlayStation Network, available to PS3 users for network gaming, video, etc. The DRM is based on Marlin, an open scheme developed by consumer electronics companies and other companies.
What does all this mean? Very simply, it means that Sony has begun the transition from a closed system to an open one.
I wish the Japanese media would recognize how important this is. I also put a lot of effort into making sure that many people understand the value of what Sony is trying to do here.
Next we will be expanding the PlayStation Network to hardware other than the PS3, because the number of PS3 units sold puts a limit on the scale of the network possible. Sony has a vertical structure for each product line, an organizational structure that resists change, so it will take time to achieve this network growth. However, a large number of employees share my opinion on this.
I remember a time when I worked for a TV network. There used to be only three nationwide broadcasting networks in the US. Around the time cable TV was invented, I was at a broadcast convention, and the head of television said in a speech to those of us gathered: "Viewing audiences are satisfied with three choices. They don't need cable and satellite TV."
I was about 40 then, and raised my hand to speak: "That's not true," I said. "The customer will always like choice. While it's better for broadcasters if the world stays the same - that there will always be three networks - it's going to change."
Four weeks later I was made an unexpected job offer. I was hired as president, replacing the man who had given the speech. If I had kept my mouth shut, I would have remained a journalist. And of course cable TV, satellite broadcasting and the like did develop, just as I'd anticipated.
The relationship between Sony and its customers is changing, even if some people at Sony may not like it. We really didn't have anything you could call a relationship back in the analog era. It was pretty simple, with the manufacturer providing products and the customer either buying them if they liked the goods, or not. The Internet and information technology have changed all that. And if we don't adapt accordingly, we will lose our customers to the competition.
Sony has begun to interact with its customers now through networked products such as the PS3, the DSC-G3 Wi-Fi digital camera and the VAIO. Now I'd say Sony is smack in the middle, between the analog and digital eras.
Maybe because of language issues or my background, people sometimes worry that I'm biased against hardware.
There's absolutely no way that's true; and I certainly don't want engineers to think I'm not interested in hardware.
All content is useless without hardware. Conversely, though, no matter how good the hardware, it can never realize its true value without content. Both hardware and content have to be there for the customer to receive that value. This is exactly where information technology is beginning to play a pivotal role.
I would like to say this to the hardware engineers: "You have done some really wonderful things, and now I want you to work together with the software engineers to create new ideas."
We have to create a fusion of engineers in the hardware, content and information technology fields. I'm not talking about technologies. Sony already has a high and growing number of young people actively involved in software design, application development. They are already increasing their communication and interaction with hardware engineers.
The important thing is that engineers open-heartedly say, "I need your help," and that they are encouraged to help each other improve their ideas. That would heighten the quality of development across the board.
Engineers don't need to change everything. All they have to do is adapt to the times. There is no need for them to discard the knowledge, skills and other resources accumulated in their past. I want them to look forward to the opportunities that adaptation offers, and to be interested in where evolution is taking us.
Engineers remain the "movie stars" of the electronics industry, but the plots and stories are changing. They have to learn new lines, and give us other splendid performances.
I intend to bring together the resources that Sony holds in the form of its outstanding engineers to create new products, and build a new relationship with our customers. It's my job to make sure the employees feel how exciting this is.
Management must act as salesmen, selling engineers on change. We have to explain that change is not something scary; it's an opportunity.
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